When you buy a house, there are a number of costs that come along with the purchase. These costs, which are also known as closing costs, can add up to thousands of dollars.
Regardless of whether you decide to relocate to Florida, Texas, or Mountain View in California, you will encounter closing costs. But don't worry, there are many resources that can give you a helping hand.
For example, if you decide to make Mountain View your new home, then somewhere like https://mountainviewareahomes.com/mountain-view-closing-costs/ and its helpful guides will be able to tell you everything you need to know about these costs before making the big move.
So, what are the four most common types of closing costs, and what do they mean for you? Well, let's find out.
Title Insurance
While many homebuyers don't actually understand what this type of insurance is, you would be surprised to know that is one of the most important factors to consider in the moving process.
Put simply, title insurance protects the lender and the buyer from any legal claims that might arise from the sale of the property. It covers things like outstanding mortgages, a safety net refund, liens, or even errors in the public record.
If you haven’t considered it before, you definitely should, as there are many benefits to having title insurance. For one, it offers protection against anyone who might try to make a claim on your property after you've already closed on it.
It also protects you in the event that the seller didn't disclose all of the necessary information about the property.
In short, title insurance gives you peace of mind when buying a home.
Inspection Fee
Another common closing cost is the inspection fee. An inspection fee is typically incurred when purchasing a property. This type of fee covers the cost of having a professional visit and inspect the property to ensure that it is in good condition.
You see, the excitement of purchasing a property can cloud your judgment when it comes to spotting any potential problems that it has, which is why it could be so important that you get it thoroughly inspected beforehand.
As well as this, a property inspection can uncover any problems with the property that may not be visible to the naked eye. This can help you to decide if the property is right for you and your family.
Additionally, if there are any major repairs that need to be carried out on the property, an inspection fee can help to cover the cost of these.
Discount Points
Discount points are optional fees that you can pay to lower your interest rate. One point is equal to 1% of the loan amount. So, on a $200,000 loan, one point would cost $2,000.
You should consider paying points if you plan to own the home for a long time and you want to reduce your monthly payments. Points are also a good option if you need to qualify for a lower interest rate to meet loan program guidelines.
Of course, everyone's financial outlook will be different, so what may be the best option for someone else, may not be the best option for you. Before jumping into any decision, speak with a professional first, as they will be able to help point you in the right direction.
Appraisal Fee
One last common closing cost to look at is appraisal fees. An appraisal fee is a charge assessed by a lender to have an appraiser evaluate a property to determine its worth.
The appraisal fee covers the cost of the appraisal itself, including the time and effort spent by the appraiser in assessing the property. Generally, this fee ranges from $300 to $500, but this could differ depending on your circumstances.
While this fee may seem like a small price to pay for such an important service, it is important to remember that you will only be responsible for this fee if you actually go through with the purchase of the property.
If you decide not to purchase the property, or if the property does not appraise for the asking price, you will not be responsible for this fee.
Closing costs are an inevitable part of the home-buying process, but they can vary in amount and type and whether you reside in Mountain View or Texas. Here we’ve outlined four of the most common types of closing costs and what they mean for you as a buyer.
If you have any questions about this or other closing costs, be sure to consult with your real estate agent or closing attorney as soon as possible.